Depository services
Depository services, like CDSL, provide electronic storage of securities, thus ensuring safety and ease of transaction. We tell you how to assess such stocks
Earlier companies issued share certificates to their investors, which many times were lost or destroyed. With depository services, one can conveniently store one's securities electronically, which ensures safety and ease of transaction. CDSL is the only depository-services provider listed on the Indian markets.
Depositories charge companies an annual maintenance fee based on the number of folios or the size of paid-up capital. This is more like an annuity business, which does not have any cyclicality since the amount of revenues from this are fixed.
Depositories charge fees from 'beneficial owners' (individual investors) when they sell shares. They also charge 'depository participants' (intermediaries like brokers) annual maintenance and settlement fees.
Companies also have to pay depositories in case of any corporate event like initial public offers, bonus issues, stock splits, change in shareholding, mergers and acquisitions, etc.